Shubham Housing Development Finance Company has announced its commitment to the Business Call to Action (BCtA) with the goal of providing 50,000 families with home financing – and establishing a loan portfolio of US$500 million – by 2018.

Shubham has transcended document-based underwriting and replaced it with a customized credit program for customers who could not otherwise access home-financing.

The BCtA is a global initiative that aims to support private sector efforts to fight poverty through its core business, supported by several international organizations and hosted by the United Nations Development Programme (UNDP).

Shubham provides housing finance solutions to families with informal incomes through an innovative credit program that looks beyond income proofs on paper. It does this by taking a holistic view of customers’ needs and providing credit to people who are outside the purview of formal credit structures, enabling families to secure home ownership and make improvements, which gives them access to other services and a standing in the community.

Since formal financial institutions will not invest their time in assessing this population's credit-worthiness, families with informal incomes are charged high interest rates by informal lenders or completely excluded from home financing. Exclusion from financing creates a poverty trap, where home ownership is virtually impossible, and families with informal incomes are forced to rent their property. Instead of building equity in a home, tenants in urban India are often restricted to short-term leases that are subject to huge increases upon renewal – or eviction.

Shubham has responded to this need by engaging informal customers in a discussion about their life story: where they come from, what they do, how they earn, spend and save. Relationship officers meet with potential customers and establish their personal and familial integrity through a comprehensive process, while credit officers follow up with financial due diligence. The company hires its officers from target communities since local people understand clients’ needs and the challenges they face.

BCtA Programme Manager Suba Sivakumaran welcomed Shubham’s commitment to the informal housing market: “By providing credit to people outside the purview of formal credit structures, this innovative social enterprise allows families to secure a better future for themselves and drive financial inclusion on a large scale. We are proud to call Shubham a partner in the Business Call to Action”.

Since its inception four years ago, Shubham has expanded to 80 branches in 78 cities in India, with an expected 20 new branches to open this year.

Customers have reported improvements in access to clean water, electricity, and sanitation. Many have relocated to safer communities, and noted decreased stress, greater pride and confidence, better relationships with their families, and an improvement in well-being.

The establishment of homeownership also contributes to community development by offering the possibility of leveraging for establishing businesses. Home owners are also more likely to invest in their communities, conserve natural resources and participate in local decision making.

“Shubham continually strives to reach an increasing amount of informal customers with an essential service. We believe that the success we experience in the growth of this business will have a direct correlation to the benefits provided to society,” stated Ajay Oak, Chief Operating Officer. “Our success in providing financing to the informal sector should serve as an example to other financial institutions that the informal sector is a viable and overlooked market.”

By 2018, the company aims to be provide 50,000 families in India with home financing. The company is now exploring options for lowering the rate of interest at which it borrows money so that it can pass on those savings to its clients. 

Shubham Housing Development Finance Company:

Shubham Housing Development Finance Company is a for-profit business that provides access to housing finance for the low-income, informal sector living in urban India. The company’s mission is to provide housing finance solutions to families with informal incomes through an innovative credit program that looks beyond income proofs on paper. By providing credit to people who were outside the purview of formal institutions, the company enables families to secure a better future for themselves and drive financial inclusion. Shubham was among the first organizations in the country to transcend document-based underwriting and replace it with a credit program customized for each of our customers. 

Business Call to Action (BCtA):

Business Call to Action is a global initiative that challenges companies to develop inclusive business models that offer the potential for development impact along with commercial success. The initiative is the result of a partnership between the Dutch Ministry of Foreign Affairs, Swedish International Development Cooperation Agency (Sida), UK Department for International Development (DFID), US Agency for International Development (USAID), and the Ministry of Foreign Affairs of the Government of Finland to meet the sustainable development goals. Companies report on progress toward commitments on an annual basis. For more information, please visit www.businesscalltoaction.org or join the conversation on Twitter at @BCtAInitiative.

Business Call to Action (BCtA)

Business Call to Action (BCtA)

Business Call to Action is a global joint advocacy platform that works to accelerate progress towards the Sustainable Development Goals (SDGs) by challenging and supporting companies to develop inclusive business models that offer the potential for both commercial success and development impact. It is hosted by the United Nations Development Programme and funded by Dutch Ministry of Foreign Affairs, Swedish International Development Cooperation Agency (Sida), Swiss Agency for Development and Cooperation, UK Department for International Development (DFID). To date, 230 companies from around the world have signed on to commit to contribute to the SDGs, from large multinational companies to national and small- and medium-enterprises in 70 countries.

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